Workers’ Party secretary-general Pritam Singh has promises that his party will take a closer look at the depreciating value of public housing that is contrary to the ruling party’s old “asset enhancement” promises that HDB flats are “nest-eggs” that keep growing in value over time.
The Asset Enhancement policy was pioneered by Singapore’s second Prime Minister Goh Chok Tong in the 1990s. Responding to criticism over the high prices of housing in 2010, Singapore’s third and current PM Lee Hsien Loong exhorted about how HDB flats are an appreciating asset as he said:
“The HDB flat is not just a shelter but also a key investment asset…over the long term, the value of HDB flats depends on the strength of the Singapore economy. Provided Singapore continues to do well, our flats will maintain their value, and Singaporeans can enjoy an appreciating asset.”
That same year, PM Lee father and Singapore’s founding Prime Minister Lee Kuan Yew warned Singaporeans not to cast a protest vote against the PAP over the affordability of HDB flats and scolded that Singaporeans must be “daft” if they find fault with the housing policy:
“We give our buyer an asset which is below market price the moment he buys it. So there is no profit, it’s a loss, but there’s a strategy behind that loss,” he said. “That loss is to give the man an asset which he will value, which will grow in price as the country develops, as his surroundings become better.
“This is a social responsibility which we have undertaken and that’s the reason why we are re-elected… No country in the world has given its citizens an asset as valuable as what we’ve given every family here. And if you say that policy is at fault, you must be daft.”
Just before the General Election in 2011, then-National Development Minister Mah Bow Tan told Singaporeans: “We’re proud of the asset enhancement policy. (It) has given almost all Singaporeans a home of their own…that grows in value over time.”
In 2013, Lee Kuan Yew promised again, “We intend to keep the value of these homes up, it will never go down. Because it will be renewed, the surroundings will improve, and as Singapore prospers, GDP goes up, the value of homes will go up.”
The hopes of many Singaporeans, who were counting on their flats to continue appreciating in value, came crashing down last year when current National Development Minister Lawrence Wong confirmed that the vast majority of flats will be returned to HDB, without any compensation for homeowners, when the 99-year-lease runs out.
Wong warned that not all old flats will be automatically eligible for the Selective En bloc Redevelopment Scheme (Sers) and that only 4 per cent of HDB flats have been identified for Sers since it was launched in 1995.
The Minister’s warning was followed by HDB chief executive Dr Cheong Koon Hean’s comments in April this year that the value of aging HDB flats will indeed decline over time. Dr Cheong’s comments sparked a massive uproar among Singaporeans, with many likening the scheme to a “ticking time bomb,” “political big bazooka,” and a “scam”.
Then, in his National Day Rally speech this year, PM Lee said that he is introducing the new Voluntary Early Redevelopment Scheme (Vers) in what appeared to be an attempt to assuage the concerns of Singaporeans.
The new scheme, which will come into effect in 20 years time, will allow homeowners of flats which are 70-years-old to opt to sell the remaining lease back to the government through collective sale, although compensation under Vers will be less generous than that under Sers.
While it remains unclear at this point how much homeowners will receive if they opt for Vers and whether the compensation will be sufficient for homeowners to purchase another flat that affords them the same standard of living, PM Lee’s introduction of Vers seemed to combat some worries that the value of HDB flats will plummet to zero.
That is, until last month at the closed-door People’s Association kopi talk on 14 Oct, when the PM sparked renewed concerns over the value of HDB flats when he asserted that he thinks it is fair that the value of HDB flats will drop to zero when the lease runs out:
Noting that “we hear PAP leaders speak in a much more circumspect manner about HDB “asset enhancement”” today as compared to a few years ago, WP chief Pritam Singh promised on social media that the “Workers’ Party will be looking into these issues more deeply to see how Singaporeans can make better housing choices in light of new realities and the information (or lack of) available today.”
Singh also revealed that the WP has already undertaken some initiatives to this end, with its youth wing organising a forum featuring experts in the property sector with no affiliation to the WP, who shared about the reality of public housing value. He wrote:
“We were delighted to have two members of public, Ku Swee Yong and Louis Chua, both with no affiliation to the Workers’ Party, but with significant professional expertise in the property sector sharing their views at a The Workers’ Party Youth Wing (WPYW) Youth Voices event on Housing at The Workers’ Party HQ yesterday afternoon.
“Swee Yong has written some thought-provoking articles which were carried in the Straits Times this year. Louis, along with a fellow equity research analyst at Credit Suisse put together a report in September this year titled, “Opening the HDB’s Pandora Box” which opined amongst other things, that there are downside risks to HDB resale prices, and separately, that private property represents a better store of value than HDB flats. TODAY covered Louis and his colleague’s report and the hyperlinked article is attached below.
“The session at the WP HQ yesterday brought some useful points and views to the fore. Participants spoke of fundamental issues like muted asset appreciation prospects, CPF accrued interest woes and negative sales, the dangers of further liberalizing the use of CPF to buy HDB properties with less than 60 years on their leases, capping the use of CPF savings for housing mortgages, lower HDB prices and more philosophically, whether public housing policies should be altered to undermine speculation, in addition to more choices for public housing buyers. Another worry was the aging population and the number of resale HDB flats that would come on stream in the next 10-15 years thereby potentially further eroding HDB resale prices, even before the onset of VERS etc.”
The opposition politician further indicated that it is crucial to tackle this hot button issue since “some decisions have far reaching consequences affecting, for example, both young buyers – who are considering resale properties today, and our seniors – who run a real risk of having to contend with asset depreciation even as they grapple with escalating costs in their golden years.”
Read his post in full here:
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